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11th Circuit: Federal Courts Lack Jurisdiction Over Gun Dealers' Case Against N.Y. Mayor
Appeals court rules that gun store owners' defamation case should proceed in Georgia court
Fulton County Daily Report
January 02, 2009
A federal appeals court panel has ruled that a defamation case brought by gun store owners against New York Mayor Michael R. Bloomberg should proceed in Georgia's Cobb County Superior Court, not federal court.
Finding that the federal courts don't have jurisdiction over the matter, the Dec. 19 ruling by the 11th U.S. Circuit Court of Appeals ordered the lawsuit be sent back to Marietta, where it was filed originally.
Jasper lawyer Edwin D. Marger, who represents the gun store and its owners, said his clients "absolutely" have a better chance of prevailing on their defamation suit in Cobb County than they would have had in federal court. Marger said his client Jay Wallace is a well-liked fixture in Cobb County.
"A Cobb County jury is the jury that should be dealing with this," said Marger.
The case was brought by Wallace, his wife, Cecilia, and their store, Adventure Outdoors. At the heart of their claims is a 2006 news conference in which Bloomberg announced that New York City was filing suit in U.S. District Court in New York against 26 gun dealers, including Adventure Outdoors, to force them to comply with laws governing firearm sales.
The New York suit, based on public nuisance laws, sought to put an end to so-called straw sales, in which a customer who is prohibited from buying a gun uses someone else to fill out the required forms. In a sting operation, New York City hired private investigators who posed as gun buyers.
Bloomberg said at the press conference that the gun dealers had sold guns that ended up in the hands of criminals in New York. He called the gun dealers "a group of bad apples who routinely ignore federal regulations."
Marger denied that his client engaged in criminal activities. "My client is probably one of the finest gun dealers in the country," he said.
Adventure Outdoors responded by suing New York City, Bloomberg and other city officials, as well as Georgia-based private investigators, claiming that the city had been negligent in investigating the gun dealer and that city officials had spread lies about the dealership and the Wallaces.
The defendants removed the case to federal court in Atlanta and asked to transfer it to New York to be combined with New York City's suit there.
In Atlanta, U.S. District Senior Judge J. Owen Forrester denied the effort to move Outdoor Adventures' defamation suit to New York but agreed the case was properly before the federal court in Georgia.
GEORGIA DEFAMATION LAW
The 11th Circuit agreed to hear an interlocutory appeal to review Forrester's subsequent rulings against the defendants on whether aspects of Georgia defamation law apply to the case.
Judges Joel F. Dubina and Frank M. Hull and Senior Judge Peter T. Fay heard oral arguments in September, with Marger's co-counsel and then-Libertarian Party presidential candidate Bob Barr arguing for the gun dealers and Peter C. Canfield of Dow Lohnes in Atlanta appearing for the New York defendants.
Three months later, Dubina wrote for the panel to explain why the judges sidestepped the issues on which Bloomberg and his co-defendants had appealed. Instead, the panel concluded the federal courts don't have jurisdiction over the case.
Bloomberg and the other defendants had argued that even though the plaintiffs bring only state law claims -- such as negligence and defamation -- the federal courts still had federal question jurisdiction over the case. In September, Canfield argued that the case belonged in federal court because Bloomberg's claims that Adventure Outdoors violated federal gun laws goes to the heart of the Wallaces' defamation action.
The panel agreed with Forrester that resolution of the defamation claims required consideration of whether the dealers broke federal law by participating in a simulated straw purchase. But the judges concluded that the federal issue in the case wasn't significant enough for the federal courts to exercise jurisdiction.
The disagreement in the case isn't over the meaning of federal law, Dubina wrote. He said the law is clear -- "federal courts have upheld numerous convictions for dealer participation in simulated straw purchases."
Instead, wrote Dubina, the parties are fighting about whether the dealers knew they were participating in a straw purchase.
"Our concern is that by authorizing the exercise of federal jurisdiction here," wrote Dubina, "we would open the doors of the federal courts in this circuit whenever a defamation defendant accuses a plaintiff of violating federal law."
Eric Proshansky, assistant corporation counsel with the New York City Law Department, said Tuesday that the city defendants haven't decided whether to challenge the 11th Circuit ruling. Such choices, he explained, have "to be considered by various levels" of the government.
Proshansky downplayed the differences between defending the case in federal or state court. "We feel comfortable that we will get a fair jury in either federal or state court," he said.
BROOKLYN CASE
Meanwhile, the federal district court in Brooklyn, N.Y., is considering New York City's case against Adventure Outdoors.
Last year U.S. District Senior Judge Jack B. Weinstein announced just days before trial that a jury would make only recommendations in the case -- because the city was seeking only injunctive relief, not damages -- and that the final ruling would rest with him.
Objecting to letting the judge decide the facts of the case, Adventure Outdoors sought to abandon its defense and proceed directly to the 2nd Circuit on appeal. (Another lawyer for Adventure Outdoors has said Weinstein has employed advisory juries in cases against gun manufacturers in the past.) The city responded by filing a motion for default judgment which is pending before the federal court in New York.
Marger said Jay Wallace's primary argument on appeal will be that the New York federal court doesn't have personal jurisdiction over him.
But Proshansky said the city will argue that by defaulting relatively late in the case in order to skip to the appeals court, the gun dealers waived their right to appeal even the personal jurisdiction issue.
The case at the 11th Circuit is Adventure Outdoors v. Bloomberg, Nos. 07-14966 and 07-15951.
